Insurance Services by Strata Managers

Strata insurance protects the Owners Corporation against a range of financial risks and is one of the most important responsibilities. And Insurance is one of the Owners Corporation’s most important financial protections. Appropriate insurance

Arranging and managing insurance is one of the core functions many strata managers perform on behalf of an Owners Corporation. This typically includes coordinating annual insurance renewals, obtaining quotations, arranging building valuations where appropriate, assisting with claims management and acting as the day-to-day liaison between the Owners Corporation, specialist strata insurance brokers and insurers.

It is important to understand that, in most cases, the strata manager is not the insurer and is not licensed to provide personal financial advice unless they hold the appropriate Australian Financial Services Licence (AFSL) or are an authorised representative. Instead, the strata manager generally facilitates the insurance process, while the insurance broker provides advice on available products and the insurer accepts and underwrites the risk.

Historically, remuneration paid to strata managers for arranging insurance has attracted significant regulatory attention. Existing NSW legislation already requires strata managers to disclose commissions, training services, gifts, rebates and other benefits associated with insurance arrangements. The proposed 2026 strata reforms seek to further strengthen transparency, improve disclosure requirements and ensure Owners Corporations have a clearer understanding of the relationships between strata managers, brokers and insurers, enabling committees to make better-informed decisions.

Why this is a critical check for NSW committees

Committee members and owners should carefully review the Strata Management Agency Agreement to understand any remuneration, commissions, fees or other benefits the strata manager may receive in connection with arranging, renewing or administering the scheme’s insurance policies.

When reviewing the agency agreement, committees should specifically look for:

• Commission Percentages: Strata managers may receive a commission from the insurance broker or insurer for arranging the policy. The agreement should clearly disclose whether commissions are accepted and how they are calculated.
• Fee-for-Service Charges: Some strata managers charge separate administration fees for arranging renewals, coordinating insurance valuations, processing claims or managing other insurance-related services. These should be clearly disclosed in the agreement.
• Disclosure Obligations: NSW legislation requires strata managers to disclose prescribed commissions, rebates and other benefits associated with insurance. Committees should also receive sufficient information to understand the insurance arrangements being recommended and the remuneration associated with those arrangements.

Reviewing the agency agreement helps ensure the committee understands exactly what services are being provided, how the strata manager is remunerated and whether the insurance arrangements are appropriate for the Owners Corporation’s needs.

The information above is provided as general information only and should not be considered financial, insurance or legal advice. Owners Corporations and individual owners should obtain independent professional advice appropriate to their circumstances.